CTL Strategies ranked in Chambers Global Guide 2024
CTL Strategies has been ranked in the Chambers Global Guide 2024, published by Chambers and Partners.
The new edition of the Global Guide highlighted CTL for its considerable market respect in tax matters, and demonstrating strength in litigation and corporate services. Among responses received from interviewees, Chamber and Partners quoted that the firm is “able to handle complex matters and provide unbiased legal advice.”
Chambers and Partners is an independent research firm that operates in 200 jurisdictions and is commonly referred to as the “gold standard” in the legal profession. Chambers and Partners publishes rankings and information on the world’s top lawyers and law firms. In-depth interviews with lawyers, in-house counsel for clients, and independent experts were used to compile the rankings.
Income Tax Bill Proposes Significant Changes to Non-Resident Contractor Payments
On 16 August 2026, the Government submitted to the People’s Majlis the Bill on Second Amendment to the Income Tax Act (“ITA”). The proposed amendment introduces significant changes to the taxation of non-resident contractor (“NRC”) payments, including an increased non-resident withholding tax (“NWT”) rate, an expanded definition of NRCs and mandatory gross-basis taxation for NRCs.
Rate Increased to 10%
The Bill proposes to amend section 55(b) of the ITA to increase the NWT rate applicable to NRC payments from 5% to 10%.
Expansion of Definition to Include Goods
The definition of an NRC is also proposed to be broadened. While the existing definition principally covers the performance or provision of services in the Maldives, the revised definition would extend to a non-resident person who, under a contract, agreement or arrangement (other than as an employee), undertakes:
The inclusion of goods potentially expands the scope of the NRC regime considerably and raises questions regarding the territorial nexus required for a contract to fall within the provision.
In particular, further clarity may be required on what constitutes goods or services being supplied “in the Maldives” and the treatment of mixed contracts involving offshore goods and services performed in the Maldives. For example, it remains unclear whether a limited service element performed in the Maldives is intended to bring the entire contract, including goods supplied offshore, within the scope of the NRC regime.
NRC Treatment to Take Priority
The Bill also clarifies the interaction between NRC payments under section 55(b) of ITA and the other categories of payments subject to NWT under section 55(a). Where a payment falls within the NRC provision, it would be treated as an NRC payment even if it could also fall within another category under section 55(a) of the ITA.
Mandatory Gross Basis Taxation
A particularly significant change is the proposed introduction of section 27(c) to the ITA. Under the existing framework, a PE may generally be taxed on a net basis, under which income attributable to the PE is included in taxable income and allowable expenses are deducted in determining taxable profit. Where NWT has suffered on qualifying income, PEs had the option to elect to treat the NWT as the final tax, effectively adopting a gross-basis treatment for that income – adopting gross basis for NWT suffered income was not mandatory.
Generally, filing tax returns on a net basis is beneficial for construction and other cost-intensive contracts, where significant portions of contract revenue may be absorbed by materials, subcontractors, labour and other project costs. Tax is therefore determined based on the contractor’s taxable profit rather than its gross receipts.
The proposed section 27(c) would remove this choice for income falling within the ambit of NRC payment. NWT deducted from NRC payments would be treated as the final tax, with no deductions permitted against that income. Gross-basis taxation would therefore become mandatory for such NRC income leading to a significantly higher effective tax burden than under the net-basis treatment.
Key Takeaway
If enacted, the changes could materially affect non-residents undertaking projects in the Maldives, particularly those in the construction and other low-margin or cost-intensive sectors.The combined effect of the broader NRC definition, the increased 10% NWT rate and mandatory gross basis taxation may significantly alter the tax cost of cross-border contracts.
Businesses should therefore review existing and proposed arrangements involving non-resident contractors, particularly mixed goods and services contracts and contracts undertaken through a PE in the Maldives.
Proposed Eighth Amendment to the GST Act Advances the Destination Principle and Introduces New Rules for Inbound Tourism Products
On 15 August 2026, the Government submitted to the People’s Majlis the Bill on Eighth Amendment to the Goods and Services Tax Act. The Bill proposes a number of material changes to the existing GST framework, with a key objective of advancing the implementation of the destination principle and bringing within the scope of Maldivian GST supplies made by foreign tour operators and travel agencies. The Bill also seeks to strengthen the GST regime through a number of structural amendments and technical corrections to the existing provisions of the Act.
Inbound Tourism Products
The Bill introduces a specific GST regime for persons that do not have a permanent place of business in the Maldives but supply inbound tourism products in the Maldives.
An “inbound tourism product” is defined to include accommodation, food, transportation and other tourism-related activities operated in the Maldives. Under the proposed amendments, supplies of such products by persons without a permanent place of business in the Maldives will fall within the tourism sector for GST purposes.
Read together with the new place of supply rules, these provisions are intended to bring within the Maldivian GST framework foreign tour operators, travel agencies and other offshore suppliers that sell or arrange Maldives tourism products, even where they do not maintain a physical presence in the Maldives.
The key features of the proposed regime for inbound tourism products include:
Taken together, the special valuation rules and the restriction on input tax deductions create a distinct GST treatment for foreign suppliers of inbound tourism products, different from the ordinary GST mechanism applicable to other registered persons. Margin-based schemes of this kind are a well-established feature of tour operator taxation in other jurisdictions.
Place of Supply
In line with the move towards the destination principle, the Bill also introduces new rules for determining whether a supply of goods or services takes place in the Maldives.
These rules are an important part of the proposed shift towards destination based taxation and should be considered together with the rules applicable to foreign suppliers of inbound tourism products.
Definition of Goods
Section 3 currently defines goods broadly as goods sold by a business conducted in the Maldives, carving out money and rights or interests arising under law or contract.
The bill replaces this with a definition confined to tangible movable and immovable property, with two exclusions:
The revised definition is significant as it limits the concept of goods to tangible property. The change however raises the question of how supplies not falling within “tangible movable and immovable property” such as software, licences, rights and digital content will be characterised.
Definition of Tourism Goods and Services
The bill addresses the interpretation arising from Maldives Bay Private Limited v MIRA, in which the Supreme Court held that Tourism Goods and Services Tax can only be levied on goods and services of a tourist establishment generally supplied to the customers of such tourist establishment. Under the proposed provision, a good or service may qualify as a tourism good or service where it is supplied by a person registered with the Ministry of Tourism, without any requirement that the supply must generally be made to the customers of a tourist establishment. The test therefore shifts from who receives the supply to who makes it.
Exemptions
The Bill also proposes to expand the list of exempt supplies under section 20 of the GST Act. The proposed exemptions include:
Other Amendments
In addition to the above, the Bill proposes a number of other amendments to the GST framework, including:
The Bill further requires any amendments necessary to the existing GST Regulations as a consequence of the Eighth Amendment, as well as any new regulations required to give effect to the Amendment, to be made within 30 days from the date the Amendment comes into force.
Commencement
The Amendment will come into force on the date it is passed, ratified and published in the Government Gazette. The provisions relating to inbound tourism products are the exception: these will apply from 1 October 2026.
If you have any specific questions relating to the proposed Amendment, feel free to contact us at 7783337.
Note: This update is based on the Bill as submitted to the People’s Majlis on 15 August 2026 and reflects our reading of it as introduced. The Bill is not yet law and may change during the parliamentary process. It should not be relied upon as advice on any particular transaction.